Author: Tara Peterson

September 4 , 2007

 

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Can you live in the condo hotel?

Some condo hotels allow year round residency and some do not.

 

 

How many days can you stay at your property?

Many condo hotels, especially the ones located in urban destinations, have usage restrictions.  Some restrict your usage to one or two months.  If you plan on using the property as a second home and want to spend whole winters or summers at your condo hotel, this might be a problem.

 

 

Is the property already completed or is it pre-construction?

Most developers will sell their property in a pre-construction phase.  Sometimes the property might not be ready for occupancy for two full years.  Always know the development timeline.

 

 

If it is pre-construction, what phase of selling are they in?

There can be large differences in the pricing and the quality of units available between phase 1 and subsequent phases. 

 

If the property is no longer in the first phase of selling, know the difference between the current price and the first phase pricing?  Pricing will almost always be lower in phase 1.  And that’s usually a good thing.  Very seldom will you want to buy a property that is worth less in the second phase.  If prices are lower, it’s a sign that the property sold poorly in the initial offering and that the demand isn’t there.  This scenario doesn’t bold well for a chance at appreciation or doing well in the resale market.

 

If it is a multi-phase project, find out if all the best units were sold in the first phase.  Be weary of developers that allow all of the best units to be cherry picked in the initial offering.  A savvy developer who knows what they are doing will selectively hold back some of the better units for the second and subsequent phases.  Doing this helps to fuel sales and demand for the product.

 

 

What is the reservation deposit and is it refundable?

Often times, developers will require a potential purchaser to put down a deposit to obtain more information.  The amount of the deposit is usually $5,000.  However, the sum required can be as much as $20,000.  Although deposits are almost always refundable, this fact should be verified.

 

 

What are the total deposits required to make a purchase and what is the timing?

Find out how much money you’ve got to put down to make the purchase.  Usually, you have to put down 20% of the total purchase price, but this can vary.

 

 

Is the purchase price negotiable?

It’s pretty rare that a premium condo hotel property will negotiate on its selling price.  In fact, we’ve never come across an example. With that said, some of the lesser known and non-branded properties might be willing to slightly reduce their pricing.  However, if a developer is willing to lower their pricing, it should raise a red flag.  Find out why they are willing to lower pricing and then ask yourself if you really want to buy a property that is being devalued right off the bat.

 

 

How many condo hotel units will there be in total?

You always want to know how many competitors you might have in the resale market.

 

 

Who are the developers?

Find out how long the developer has been in the business, what other properties they’ve developed, and of course, anything else you can dig up.  A developer is ultimately the person who makes the project a failure or a success.  They are responsible for not only overseeing the physical construction of the property, but also the sales and marketing aspect, as well.  An inexperienced developer can be a nightmare.

 

 

Who is the hotel management company that will run the property?

You had better know who is operating your property.  Find out how long the management company has been in the business, what other properties they’ve managed, and how many other hotels they are currently managing.  In particular, you’ll want to know who the general manager is going to be and what his experience has been.

If the property is a branded condo hotel, you can certainly feel comfortable knowing that you’ve likely got one of the best operators in the world looking after your property.  However, if the property is not branded and you’re considering making a purchase, make it priority #1 to learn more about the management company and the general manager.

 

How far in advance do you need to make a reservation to stay at your property?

The process for arranging a stay at your property should be expressly written into your contract.  If not, be sure to get a written confirmation of the process from the rental management company.

 

 

Is there a designated hotel employee who will deal with property owners?

Unfortunately, many condo hotels do not have a designated employee for homeowner relations.  This has proven to be a major source of frustration for some condo hotel owners.  Be weary of a property that has a poor plan or no plan for keeping owner relations at a high level.

 

 

Is there a website for owners that you can get all your information from?

An ideal situation is for you to have a place online that you can go to and view your revenue statements, documents and more.

 

 

What is a Condo Hotel Property Representative?

Very rarely do developers sell the properties themselves.  Usually, they hire a sales and marketing company to get the job done.  When you’re speaking with a sales specialist representing a particular property, they are likely working for a sales and marketing company that was hired by the developer.  Traditionally, these agents are highly experienced in the condo hotel industry and know a great deal more about condo hotels than your typical real estate agent.  With that said, it’s important to understand that they are working on the developer’s behalf to sell real estate.  Even though they are usually impartial, it’s important to know who’s paying them.

 

Should you have a Real Estate Agent represent you in your purchase?

You should always consider utilizing a real estate agent to assist you in your condo hotel purchase.  If the agent is intimately experienced with condo hotels, they’ll prove to be an invaluable resource.  If they lack experience in the field of condo hotels they can prove to be a massive liability.  So, select your representation wisely.

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COPYRIGHT © 2007 PREMIUM CONDO HOTELS - NO PART OF THIS ARTICLE MAY BE REPRODUCED WITHOUT THE EXPRESS WRITTEN CONSENT OF THE AUTHOR. ALL INCIDENTS OF PLAGIARISM WILL BE PROSECUTED TO THE FULLEST EXTENT OF THE LAW.

 

THE ABOVE SUMMARY IS NOT INTENDED TO BE A THOROUGH AND EXHAUSTIVE EXPLANATION OF ALL OF THE TERMS AND PROVISIONS OF THE PROJECT DOCUMENTS. WHILE THE PURCHASER CAN USE THIS SUMMARY AS A GENERAL SUMMARY OF THE PROJECT, THE PURCHASER MUST REFER TO THE PROJECT DOCUMENTS TO DETERMINE HIS OR HER ACTUAL RIGHTS AND OBLIGATIONS. IF ANY CONFLICT OR DIFFERENCE EXISTS BETWEEN THIS SUMMARY AND THE PROJECT DOCUMENTS, THE PROJECT DOCUMENTS WILL CONTROL.